The Premier League's top sides must not be allowed to "bypass" fair play rules by setting up global feeder clubs, according to former Football Association chief executive Ian Watmore.

Watmore believes UEFA will be "all over clubs like a rash" that aim to avoid Financial Fair Play regulations by loaning top stars from overseas satellite outfits to cut transfer fees.

Arsenal manager Arsene Wenger earlier this month questioned Manchester City's loan capture of Frank Lampard from New York City - a club also owned by Sheikh Mansour.

Ex-FA boss Watmore reckons City were within their rights to recruit former Chelsea midfielder Lampard on loan, but reckons the European governing body may review similar processes in the long run.

Watmore called on England's top clubs to invest in home-grown talent through sending more youngsters on extended loans to lower-league clubs.

"You've got to be careful of clubs negotiating the constraints of top European competition, and I'm sure UEFA will be all over clubs like a rash," Watmore told Press Association Sport.

"The governing bodies need to monitor this very carefully, because you do not want people bypassing European rules by doing deals elsewhere then loaning players back.

"There have been half attempts at this over the years with clubs in Belgium and the Udinese model with Watford.

"We are lucky enough to have the league that most people want to watch and want to pay to watch.

"We should be able to use the wealth of that Premier League locally - not to try to dislodge the likes of Thierry Henry, who lift the standard, but the bog-standard average imports that we can do without.

"The real cream of English football still rises, but where we lack is strength in depth, and that's been squeezed out.

"And that's the area where we should be using our money to strengthen, not spending it abroad."

Watmore has assumed an unpaid, non-executive board role with north-east football agency Quantum Sport, to specialise in helping youngsters fulfil their potential.

His son Duncan is now thriving at Sunderland, but only after being released from Manchester United's academy and dropping into the non-league ranks.

The Black Cats snapped up the 20-year-old from Altrincham, before sending him on loan to Hibernian last season.

Watmore said his experiences helping his son have given him fresh insight into the battle for young English talent to succeed at Premier League level.

He warned chairman Greg Dyke and the FA commission not to alter English football's league structure, but to fight for an increased and extended loan system instead.

"I think the commission that Greg started was a good idea and has come up with a lot of good ideas," said Watmore, who was FA chief executive between 2009 and 2010.

"It has got this unfortunate headline of the 'B teams', and I'm just not there with that. I don't think we need to do that at all.

"I don't think we need to mess with our league structure that is unique in world football and the envy of the world too.

"I don't think we need Manchester City and Manchester United B teams in that area, for example, when you look at clubs like Altrincham and how it would affect them.

"And that scenario would be played out across the country.

"Clubs need to send more of their academy players on extended loans, where they can play regularly in real pressure situations.

"Clubs have to realise and recognise when it's the right time to let their young players move on in order to secure regular football.

"Otherwise players hit 22 and can't secure a post-under-21 contract, and find themselves squeezed out by youngsters coming through the system."